Salesforce.com Acquires Demandware

Salesforce.com in early June acquired Demandware, a provider of enterprise cloud commerce solutions, for $2.8 billion.

Salesforce plans to incorporate Demandware’s technology into its new Commerce Cloud, which will ultimately integrate into the much larger Customer Success Platform. Salesforce’s customers will now have access to commerce management tools within their Salesforce suite.

“Demandware and Salesforce share the same passionate focus on customer success,” said Tom Ebling, CEO of Demandware, in a statement. “Becoming part of Salesforce will accelerate our vision to empower the world’s leading brands with the most innovative digital commerce solutions that enable them to connect one-to-one with customers across any channel.”

For the CRM industry, the acquisition is notable because it extends

Salesforce.com’s reach into the fast-growing digital commerce market—a market that Gartner expects to expand globally by more than 14 percent annually, reaching $8.5 billion by 2020.

The acquisition also highlights a larger industry trend toward uniting CRM and e-commerce. “The future of CRM includes commerce,” says Ray Wang, founder and principal analyst at Constellation Research.

Marc Benioff, chairman and CEO of Salesforce.com, said in a statement that the deal was about “the future of commerce.”

“Demandware is an amazing company—the global cloud leader in the multibillion-dollar digital commerce market. With Demandware, Salesforce will be well-positioned to deliver the future of commerce as part of our Customer Success Platform and create yet another billion-dollar cloud,” he said.

Salesforce.com’s other cloud offerings include sales, service, marketing, communities, analytics, and IoT.

“Demandware brings Salesforce...closer to owning the full customer life cycle,” says Eric Berridge, CEO of IBM’s Bluewolf, a Salesforce.com consultancy and implementation services provider, via email. Seamlessly leading customers to purchases is “a huge value-add for organizations trying to reach their business objectives,” he adds.

“This points to how important digital commerce is to so many businesses, and how being close to the transaction, ordering, and product browsing is to the customer relationship,” says Mike Elmgreen, chief marketing officer at Handshake, provider of a B2B commerce platform.

Consolidation between CRM vendors and commerce platforms started a few years ago, with SAP’s acquisition of Hybris for an undisclosed sum in June 2013; Oracle’s acquisition of ATG for $1 billion in November 2010; and IBM’s launch of the Smarter Commerce platform, following seeds planted in early 2010 with the acquisition of Sterling Commerce for $1.4 billion.

“CRM is evolving dramatically,” said Ariel Luedi, Hybris’s CEO, at the time of his company’s acquisition by SAP. “The new style of CRM is all about making real-time buying decisions. [Companies are asking for] solutions that cross all stages of the customer life cycle, from the research phase to the actual purchase and customer service and returns in the aftermath of an interaction.”

Salesforce.com outbid many competitors to take over Demandware. Meanwhile, Wang expects Adobe and Microsoft to step up their efforts around B2C and B2B commerce as well.

The Demandware acquisition is Salesforce’s largest to date. The company acquired ExactTarget for 2.5 billion in June 2013. 

Additional reporting by Oren Smilansky

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